The Hindu Business Line : Chhabrias to up overseas stake in Falcon

THE Dubai-based M.R.Chhabria group has decided to increase the overseas holding in Falcon Tyres Ltd to 100 per cent of the issued and paid-up equity capital of the company. The group currently holds around 78 per cent stake in it.

Jumbo World Holdings Ltd, Dubai, controlled by NRI businessman, Mr Chhabria, has applied to the Foreign Investment Promotion Board (FIPB) for acquiring 18,38,825 shares of Falcon Tyres, constituting 30.65 per cent of the company's paid-up equity capital, held by group company Mather and Platt, at the ruling market price.

The companies controlled by the Chhabria group in India include Shaw Wallace, Dunlop India, Falcon Tyres, Mather and Platt, Hindustan Dorr-Lever and Gordon Woodroffe. Together, they command an annual sales turnover of around Rs 5,000 crore.

Interestingly, the Chhabria group did not acknowledge that Jumbo World Holdings has applied to FIPB for permission to take up manufacturing, marketing and distribution of automotive tyres. In response to queries made by Business Line, group spokesperson, Ms Sunita Budhiraja, in a written reply, stated "there is no application from Jumbo World Holdings to FIPB for automotive tyres".

Highly-placed Government sources, however, have confirmed that the Jumbo World Holding's application regarding automotive tyres was registered by the Secretariat for Industrial Assistance (SIA) on February 6.

According to the application filed by Jumbo World Holdings, it is a company incorporated in British Virgin Island with a paid up equity of $170 million and is entirely held by Mr Chhabria.

Informed sources said that the move is a part of the company's plan to consolidate its Indian operations and making it more closely held. "Eventually, the plan is to make the group's businesses in India more closely held and may be at some future date, delisting of the group companies could become a reality,'' informed sources said.

According to the existing norms laid down by the Securities and Exchange Board of India, if the promoter's shareholding in a company exceeds the 90-per cent mark, the company can seek delisting from the bourses, which would be followed by an open offer to provide the small investors an exit option.

The price at which the acquisition is to be made will be determined in accordance with the SEBI/RBI pricing norms.

In Dunlop India, the other tyre company in the group, which is currently with BIFR, the promoters have a 39-per cent control. In Shaw Wallace, the promoters' stake is around 50 per cent including friends and associates. In Mather & Platt, the promoters hold 51 per cent and in Hindustan Dorr-Oliver the promoters' stake is 73 per cent.

According to industry estimates, the persistently low share prices offer the Chhabrias an opportunity to acquire 100 per cent control of group companies at less than Rs 150 crore currently.

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